Anyone who hasn't visited the Las Vegas strip in, oh, say the past 15 years or so probably wouldn't recognize the place today. The days of run-down hotel rooms, second-rate lounge acts, and $1.99 steak dinners are long gone. Once used as loss leaders to attract gamblers, a company's hotel rooms, restaurants, entertainment venues, and other amenities are now designed to be profit centers of their own. The end result: Las Vegas has been transformed from a rough-around-the-edges gaming town into a sophisticated world-class entertainment destination. So it's only fitting that the new Vegas just got its first five-star resort rating.
Of course, pinning a precise date on the gradual transition in Vegas is impossible, but many credit developer Steve Wynn as being the architect of the new Vegas -- beginning with the Mirage in November 1989. At a then-exorbitant cost of $630 million, financed mostly with junk bonds, the extravagant new resort needed to generate revenues of approximately $1 million per day just to stay afloat -- a feat some observers deemed impossible.
But the Mirage paid for itself within 18 months -- volcano and all -- and Wynn quickly silenced the critics. From there, he went on to build even more lavish megaresorts, including Treasure Island and Bellagio, and the bar is continually being raised. Last weekend, we found out just how far that bar had ascended when Wynn Resorts'
That coveted designation puts Wynn in very select company. After rigorously judging the nation's premier resorts in more than 750 categories, only the elite of the elite garner five-star status. Along with Wynn's Las Vegas resort, just 52 of North America's most posh resorts made the cut, including San Francisco's St. Regis, Nashville's Hermitage, and New York's Mandarin Oriental.
Several high-end Las Vegas resorts have come close; Ritz-Carlton Las Vegas, MGM Mirage's
Whenever your poolside cabana comes with its own iPod and you find a Ferrari dealership on site, you know you're not staying at a run-of-the-mill resort. And as for fine dining, visitors can expect the same impeccable service and attention to detail. In fact, the culinary delights from Wynn's master chef Alessandro Stratta garnered top honors from both Mobil and AAA, an accomplishment that fewer than 3% of the nation's top gourmet restaurants can boast.
At an average cost of $275 per night, Wynn caters primarily to those who want to be pampered. However, its 95% occupancy rate suggests that plenty of people are willing to shell out a premium rate for the opulence that has become the hallmark of a Wynn property. Over the past three months alone, the resort raked in a staggering $310 million in revenues.
Of that total, nearly 60% -- $178 million -- was generated outside the casino. That figure validates the non-casino-centric business model that Wynn pioneered more than a decade ago -- and which Atlantic City has only now begun to replicate.
We already knew that Las Vegas has come a long way since Wynn first rolled the dice on an unproven concept in 1989. Thanks to Mobil, we now know exactly how far.
Wynn's resort stacks up pretty well with its competitors, but how about its stock? Is Wynn worth $9 billion? If you have an opinion on the stock, share it at Motley Fool CAPS, where investors like you are rating and discussing nearly 3,000 stocks. Joining is free.
Fool contributor Nathan Slaughter owns none of the companies mentioned.